Did Legal Aid overstep the mark by selling landlord decision as a victory for low-income tenants?

By Natalie Hickey, September 12, 2016

This is a story about the restoration of dignity for one person.

However, for Legal Aid to sell this outcome as a happy ending for everyone in similar circumstances appears to have overstepped the mark.

Consider this Legal Aid statement: “A Supreme Court decision will mean that more than 250,000 low-income Victorians in the private rental market are not forced to accept sub-standard, poor quality and sometimes dangerous housing.”

Keep the above statement in mind as you read a synopsis of the judgment below, including the warning provided by Associate Justice Daly about the potential (negative) impact of her decision.

The tenant and a very dilapidated home

Vikki Shield, a woman on her financial knees, and with mental health issues requiring the assistance of a case worker, more than five years ago rented out a barely habitable home that had two key advantages. It was a roof over her head where she might otherwise have none. It also had a shed to house her greyhounds.

When she arrived, Vikki knew straight away (if she ever doubted it) that the place might be her castle, but it was unlikely to be anyone else’s. She was confronted by the previous tenant’s items that had not been removed.  These included sheepskins in the oven, pornographic films, and obscene pornographic imagery stuck on one of the doors. There were rats. There was a mouse nest in the top of the oven.

The place was also very dirty but Vikki cleaned it up.  However, the clothes line in the back garden had no wire on it for hanging clothes, the wash trough in the laundry had broken away from the wall, the dishwasher had been disconnected and placed in the laundry and was not working. The kitchen cupboards were filthy and stained with rat urine and faeces, and were as such unusable. There were no seals on the oven. 

The hot water system was faulty from the start.  The smoke alarm did not work and was not fixed until 2013. The heater leaked gas.

The house was also on land prone to floods. All but a few rooms contained mould. Soon, mould was throughout Vikki’s belongings.

Then the shed holding the greyhounds caved in.  It was never replaced.

The landlord was not a ‘slumlord’ in all the negative connotations of the word. Rather, he was likely a good guy. Associate Justice Daly said in her decision, “I agree that any undue criticism of the landlord personally is unwarranted“.  

In the months prior to the commencement of the tenancy Vikki had been living out of a car. The landlord said that he and the real estate agent tried to help her by allowing her to stay at the premises, carrying out essential repairs, and not increasing the rent. He believed that the tenant was always dealt with respectfully, and he let her stay after he decided not to spend any more money repairing the premises, because she pleaded to remain. The landlord said she agreed to him putting a halt on repairs, except for those of the most essential variety that might otherwise compromise her safety.

Vikki Shields said herself in the aftermath of the decision:

“When you’ve been homeless, and there’s no housing that’s affordable, you reach rock bottom and would accept anything. I’d have slept in a cowshed at that point.

“You feel like a second-class citizen. I kept trying to be grateful that I had anywhere to live at all, but I was embarrassed at the state of the house and afraid of being evicted if I asked for repairs.”

The landlord did, in fact, make some repairs over a period of five years, although the nature and cost (about $10,000 worth) can perhaps be described as barely papering over the cracks.

When the landlord did decide to end the tenancy, he also said he allowed Vikki some extra time to vacate.

Vikki Shield eventually tried to recover about $14,000 in compensation for the cost of repairs that were not done during the tenancy. She went to the Victorian Civil and Administrative Appeals Tribunal (VCAT).

As is often the case at VCAT, Vicki appeared without legal representation, although assisted by a layperson. The landlord and real estate agent also appeared for themselves.

One does not get the impression, from reading extracts of the appeal judgment, that Vikki Shields’ experience at VCAT was a particularly  happy one. It appears that Vikki was the recipient of at least one, “are you listening to me?“, from the presiding Tribunal Member, the kind of language that, no matter the potentially legitimate exasperation of the person saying those words, immediately puts the listener on notice that you are less important than him.

The specific exchange was this:

MEMBER: So if the tenant objected so much why did she renew the lease after six months?

MS GARLAND: Ms Shields – – –

MS SHIELDS: I didn’t renew the lease.

MEMBER: There is an obligation if someone is seeking compensation – – –

MS GARLAND: Yes, I (indistinct).

MEMBER: – – – they have to take all reasonable steps – are you listening to me? They have to take all reasonable steps to minimise their loss. Now if after six months you find the place is unsatisfactory, being consistent with your desire to minimise your loss you might say, ‘Well, we’ll leave, thanks very much, and find somewhere else to go.’ It’s not an option to say, ‘Well, we’ll stay on here as long as we can and we’ll see if we can get some compensation out of the landlord for a long period if we can.’

Daly AsJ referred to the Tribunal Member’s style as “inquisitorial”. She noted that Vikki’s response to the Member’s query was to the effect that she had mental health issues, and she struggled to find alternative accommodation that she could afford, despite extensive searches.

Vikki lost her case at VCAT, the essence of the Tribunal Member’s decision being, you get what you pay for: 

• The place was in poor condition, and Vicki and her case worker “saw it for what it was“
• But it was very low rent
• Vicki stayed there for 5 years when she could have left
• If repairs were done the rent would go up
• Because the tenant accepted a place in “poor nick”, and elected to remain there without serving a breach notice, she could not later seek compensation.

Vikki Shields appealed this decision. This time, she had a lot more help.

Victoria Legal Aid represented her, and a Queens’ Counsel and junior counsel appeared on her behalf in the Supreme Court.

She won, Associate Justice Daly deciding that VCAT’s approach, which appears to have pervaded similar cases, was wrong.

Why Vikki Shields won

Daly AsJ looked at the relevant words of the Residential Tenancies Act 1997 (Vic.) (RTA).

The words of section 68 of the RTA, on their face, are pretty direct.

What you will not see in the RTA is the more limited requirement that the landlord must take only “reasonable steps” to repair, OR that the landlord can contract out of these obligations, OR that if you don’t get a rental increase you are essentially accepting the crappy nature of where you live, OR that if you decide to stay rather than vacate it means you accept your rental conditions and essentially waive your right to compensation.

In short, by examining the precise words of the legislation, the judge was able to cut through the clutter of all this lateral thinking to arrive at a simple conclusion: the Act says a landlord must keep the place in good repair and the Act means what it says.

She found that the rest is irrelevant or otherwise outside the scope of what the legislature intended.

The reasoning is, for the most part, compelling, and goes like this:

• The word ‘ensure’ means ‘make sure’.
• ‘Good repair’ means ‘tenantable repair’, or ‘reasonably fit and suitable for occupation’.
• In many instances it will be inevitable that effecting repairs will ‘upgrade’ the standard of the premises, for example, by replacing old floor coverings with new floor coverings.
• A way to test ‘repair’ is to assess whether something already there which has become dilapidated or worn out is being replaced – even if it is a replacement by its modern equivalent, it comes within the category of repairs and not that of improvements.

This all makes great sense, but what if the place is terrible to begin with, particularly at the time when the tenant has moved in?

Well, the Victorian legislation does not directly answer this question because, unlike counterpart legislation in Queensland and South Australia, there is no obligation on a landlord at the start of a tenancy to inspect and fix things up.

So, through no fault of the judge, the reasoning at this point becomes less satisfactory, because one must imply what the legislature intended rather than rely on the plain meaning of the words.

Daly AsJ determined that to maintain rental premises in good repair imports an obligation to put them in good repair in the first place. This is because one cannot “keep” something in good repair without putting something into it first. 

There is some relativity involved.  Daly AsJ accepted that what amounts to ‘good repair’ may be tied to the age and character of the relevant premises. 

In other words, this doesn’t mean that a modest home should be ‘repaired’ to the level of a Toorak mansion. The materials used will reflect the age and stage of the home.

What could Vikki Shields have expected as ‘good repair’?

The reasons do not dive into the detail as to whether the compensation sought of $14,000 was justified. That is a matter requiring separate attention.

Accordingly, let us do our own ‘back of the envelope’ exercise as to what Vikki Shields could reasonably have expected as ‘good repair’ when she rented an old, dilapidated house:

• A clean place in which someone had removed the porn, sheepskins and mouse nest before she moved in, and also cleaned the kitchen cupboards of rat urine and faeces so they were capable of use.
• No rats, which likely means a significant general clean up including works to block holes in roofs, walls and floors (from the infestation this sounds like a big job).
• A wire on the clothes line.
• A wash trough that worked.
• A new dishwasher, and the removal of the old disconnected one from the laundry (this is an example of something that might appear like an upgrade but likely constitutes ‘repair’ because an existing item is being ‘replaced’).
• A new oven having regard to the broken seals and the unfortunate mouse nest (again, in the repair category even though the outcome is a modern equivalent).
• A working smoke alarm.
• A working hot water system.
• A heater that did not leak gas, meaning it might need to be replaced.
• The damp appears to be a particularly difficult issue, because its existence seems the product of the location of the house – expert help likely required here.
• The replacement of the shed for the greyhounds when it fell down.

On this analysis, Vikki’s compensation claim appears to be at the very low end.  One could imagine spending $20,000 to $30,000 without much effort at all to make the place reasonably fit and suitable for occupation.

This, therefore, leads to a more fundamental question as to whether, if these works were required, they would have been done at all.  Why not tear the place down, and sell the land?

Further, if they were done, the prospect of Vikki, after such works and expenditure, being able to afford to live in such a house for low rent, and without rental increase for the next five years, appears extremely low at best.

Is this decision good news for renters of DODGY PLACES?

No. Certainly, Associate Justice Daly was alive to this risk.  She said:

“I am conscious that s 68 of the RTA, properly construed, may well have the effect of limiting the availability of very low cost housing in the residential tenancies market, by preventing owners of properties in poor repair from renting out their properties at low rent, whether for commercial benefit, reasons of convenience, or, as was said to be the case here, on compassionate grounds. However, that is a policy choice of the legislature, and such considerations should not influence the proper construction of the terms of s 68 of the RTA, or its application and enforcement by VCAT and this Court.” (emphasis added)

In other words, the decision was derived solely from a construction of the RTA, and was not influenced by policy.  As the judge said, policy is in the hands of the legislature, so if you want to invoke minimum standards without consequential tenant effect, do it on the floor of Parliament and not via the courts.

Conclusion

How then, could Victoria Legal Aid have sought to promote this win as a positive game changer for low income tenants, in the face of Associate Justice Daly’s observations?  Let’s not forget what the judge said, namely, section 68 properly construed, “may well have the effect of limiting the availability of very low cost housing“.

It is concerning that the Legal Aid public relations strategy has endeavoured to embolden low-income Victorians into thinking that they can demand repairs without any reciprocal increase in rent or other detriment to their tenancy.

The only likely benefit for low-income tenants appears to be in the short term, because disgruntled tenants might now have a case for compensation in relation to past transgressions.  However, this by no means guarantees a rosy rental future either for them or their successors.

Only in the aftermath of this public relations strategy, when the dust is starting to settle and people are moving onto the next story anyway, is the Legal Aid tone starting to change.

Further, Legal Aid is also promoting its attempts to change the law, in an apparent acknowledgment that the judgment does not go far enough.

For Vikki Shields this is a very important decision. It is also terrific that Legal Aid supported her so successfully.  For everyone else like Vikki though, without changes to the law, things might not get better, and they could get worse.